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JPA reported PAT of Rs1.07B (up 2%), ahead of our estimate of
Rs751MM. The beat mainly came from sharply better-than-expected
construction margins. As margins in this segment tend to be volatile and
dependent upon the mix of projects booked as revenues in a particular
quarter, we do not think there is case for upward revision of estimates.
Construction margin at 19.6% (up from 7.3% in 1Q last year)
surpassed expectations, while the revenue booked, at Rs12.7B (down
11.3% YoY) was weaker than expected: We infer these variations are
due to 1) lower % of captive real estate construction which has lower
margins, and 2) quarterly variations in nature of revenues booked. Thus
our expected margin (standalone) of 15.6% for the year or revenue degrowth
of 15.7% do not change. The current margin outlook from
management is 15% for real estate construction.
Cement revenue and EBIT were weak, as expected: Revenue grew
6%, despite capacity growing 36% YoY – we believe volume growth /
pricing were sluggish. Our inferred EBITDA per ton is around Rs920. As
expected, EBIT declined 32% due to higher cost and depreciation.
Additionally, the 31% increase in interest cost is mainly attributable to
cement capacity increases, in our view.
Real estate EBIT growth at 19% was as expected: Revenue
recognition was weak (-5%) but the margin, at 53%, was slightly ahead
of estimates.
JPA reported only parent results on a quarterly basis. Subs results were a
mixed bag. 67% power sub JPVL had surpassed estimates due to shortterm
merchant sales, but the uncertainty around the PPA for the key
Karcham Wangtoo plant is the bigger structural overhang. JPIN results,
on the other hand, trailed expectations due to weakness in revenue
recognition, although margins improved.
While the sharp stock correction in the past month could call for a relief
rally after the results, we do not see pressures for the real estate, cement
and power verticals abating soon, for the consolidated entity.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JPA reported PAT of Rs1.07B (up 2%), ahead of our estimate of
Rs751MM. The beat mainly came from sharply better-than-expected
construction margins. As margins in this segment tend to be volatile and
dependent upon the mix of projects booked as revenues in a particular
quarter, we do not think there is case for upward revision of estimates.
Construction margin at 19.6% (up from 7.3% in 1Q last year)
surpassed expectations, while the revenue booked, at Rs12.7B (down
11.3% YoY) was weaker than expected: We infer these variations are
due to 1) lower % of captive real estate construction which has lower
margins, and 2) quarterly variations in nature of revenues booked. Thus
our expected margin (standalone) of 15.6% for the year or revenue degrowth
of 15.7% do not change. The current margin outlook from
management is 15% for real estate construction.
Cement revenue and EBIT were weak, as expected: Revenue grew
6%, despite capacity growing 36% YoY – we believe volume growth /
pricing were sluggish. Our inferred EBITDA per ton is around Rs920. As
expected, EBIT declined 32% due to higher cost and depreciation.
Additionally, the 31% increase in interest cost is mainly attributable to
cement capacity increases, in our view.
Real estate EBIT growth at 19% was as expected: Revenue
recognition was weak (-5%) but the margin, at 53%, was slightly ahead
of estimates.
JPA reported only parent results on a quarterly basis. Subs results were a
mixed bag. 67% power sub JPVL had surpassed estimates due to shortterm
merchant sales, but the uncertainty around the PPA for the key
Karcham Wangtoo plant is the bigger structural overhang. JPIN results,
on the other hand, trailed expectations due to weakness in revenue
recognition, although margins improved.
While the sharp stock correction in the past month could call for a relief
rally after the results, we do not see pressures for the real estate, cement
and power verticals abating soon, for the consolidated entity.
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